To guide our data collection and analysis, we developed a framework for organizing information about the characteristics of high-risk seniors and the key elements of care systems that try to serve them. We also developed a framework for considering the overall system within which Medicare + Choice plans operate.

Our study of high-risk seniors is organized around concepts identified by the acronyms VIP and I-CAN (Figure I.1). VIP stands for three key population characteristics that will challenge any system that tries to serve high-risk seniors:

Variability. High-risk seniors often differ substantially from one another, and their conditions and symptoms often vary over time. Not only do they have varying mixes of conditions and impairments, but their attitudes and their capacities for self-care differ widely. As a result, individualized care plans (rather than standard protocols) often must be developed to fit each person’s profile.

Impairments. Most high-risk seniors have impairments that make them more difficult to serve than the general senior population. In particular, physical and cognitive impairments can make it hard for these seniors to access the care system effectively and, in some cases, to care for themselves. People often have multiple conditions that require organizationally complex care and place them at high risk for developing additional conditions or impairments. Finally, impairments are likely to worsen over time, and the impairments of some seniors will be sufficiently severe that they find it difficult to care for themselves or to live independently.

Providers. High-risk seniors tend to have numerous providers and receive services in many settings, including physicians’ offices, hospitals, nursing homes, and their own homes. This diversity of provider types and settings also leads to organizationally complex care.

I-CAN stands for care system features that MCOs can use to respond effectively to the needs of high-risk seniors:

Identification. No targeted services are possible without initial identification of those seniors who are at high risk. This can be done through screening that uses surveys or administrative data, by providers in the course of delivering care, by monitoring hospital admissions to find people who have developed serious illness with substantial sequelae, and through general outreach activities designed to encourage self-identification by high-risk seniors. Identification systems also need to include some sort of general assessment system in order to refer identified people to the appropriate services, including more detailed assessment.

Care Management. This type of service strives to make organizationally complex care more efficient and more manageable for the seniors and providers. It begins typically with a detailed assessment of people’s needs and then helps to coordinate care delivery among multiple providers and facilitates referral to and follow-up with appropriate social service providers. It can also educate patients about monitoring their conditions and about improving their self-care and lifestyles.

Assistance Programs. These programs are aimed at seniors with specific needs who generally do not require the intensive efforts of care management. Because of the variability among seniors, a wide array of assistance programs exists. These include many types of disease management to address difficulties adhering to treatment regimens for specific diseases (like diabetes or heart failure), pharmacy programs that look for possible drug interactions or more efficient drug combinations, general health promotion and disease prevention programs, behavioral health screening and referral, and volunteer programs that address social isolation.

Networks. MCOs can also promote better care for high-risk seniors by the way they build and run their networks. This includes recruiting geriatricians or other providers with specialized knowledge and skills for treating seniors. MCOs can also selectively contract with skilled nursing homes or other providers in order to ensure quality and to promote better coordination of care. Finally, MCOs can try to influence care delivery by compensating providers in particular ways, or by developing systems to foster information sharing among providers.

In addition to the VIP and I-CAN characteristics of high-risk seniors and the MCOs that serve them, it is important to pay attention to the fragmented system of care that shapes the health, functioning, and quality of life of a growing number of high-risk seniors (Gold et al. 1998). Although a Medicare + Choice plan can control delivery of most of the health care its members receive, the plan remains only one element in this system. Most social services and custodial care that high-risk seniors need are delivered either by providers who are independent of a plan’s provider network or by the seniors and their families. Furthermore, accountability for the mix of services high-risk seniors receive is divided among numerous stakeholders who often have differing priorities and authority. Finally, plans’ competition for enrollees, providers, and capital creates incentives and constraints with respect to the strategies they use to improve care for the portion of the market represented by high-risk seniors.

Our view of managed care systems for high-risk seniors in Medicare begins with the elderly beneficiaries and ends with the key outcomes the system is intended to affect: health status, functioning, quality of life, and costs (Figure I.2). Outcomes are shaped generally by people’s lifestyles, attitudes, and physical makeup, as well as by the care they receive. That care is shaped, in turn, by the actions of the managed care plan, which is responsible for delivering or arranging for Medicare-covered medical care. The actions of the plan are shaped by two broad external forces: the Medicare program and market forces. Medicare, which is administered by CMS, contracts with health plans to deliver its benefit package to those beneficiaries who choose to enroll. CMS thereby sets the requirements for and expectations about what a plan must deliver to its members, as well as furnishes established capitation payments. A plan’s actions also are shaped by the characteristics of the markets in which it operates, particularly the level of competition from other insurers, the policies of state regulators and accreditation bodies, the infrastructure of local care, historical practice patterns, and demands by the plan’s shareholders (or, in the case of nonprofit plans, by sponsors).

Care is delivered to high-risk seniors by a fragmented system. Most medical care is covered by Medicare and is delivered by the plan’s provider network. The remaining medical care (such as medications), along with services such as long-term nursing home care, personal assistance, nutrition services, housing, and transportation, are provided by a mix of providers who operate largely outside the Medicare system. Finally, a substantial amount of care is provided by unpaid caregivers, such as family members, friends, and neighbors, and by the high-risk seniors themselves. Although the managed care plan may influence these other sources of care through education and coordination, and may even decide to fund some of these services, it remains contractually obligated only for Medicare-covered care. Because the boundaries between the different types and sources of care are not well defined, there often are alternative sources for specific services. Thus, the care delivered by one group can interact with that delivered by others.

Although the elements in this structure can interact in myriad ways, three relationships are particularly important for our study of Medicare managed care for high-risk seniors: (1) the interrelationship between elderly Medicare beneficiaries and the plan, (2) the contract linking Medicare and the plans, and (3) the fragmented nature of care delivery for high-risk seniors.

When beneficiaries enroll in a managed care plan, they tie receipt of Medicare benefits to a contractual entity (the “Medicare + Choice plan”). The plan is then obligated to provide or arrange for all Medicare benefits, as well as any other benefits it has added to its package. Most Medicare risk plans restrict beneficiary choice to a specific provider network.3 In exchange, plans offer savings to most beneficiaries willing to accept these restrictions. For example, many plans do not have deductibles or charge members a premium, although members still must pay the Medicare Part B premiums. Many plans also offer coverage for prescription drugs or for hearing aids and glasses. During the late 1990s, beneficiaries in these plans often could save $1,000 or more per year in out-of-pocket expenses, compared with the fee-for-service system.4 A key issue facing beneficiaries who consider enrolling in managed care is whether the savings are sufficient compensation for letting the plan restrict their choice of providers.

The relationship between Medicare and a plan centers on the contract, which obligates the plan to provide the Medicare benefit package, along with any additional services the plan has added to its benefit package, to enrolled beneficiaries in return for a specific capitation payment rate. The contract stipulates such features as mandated 24-hour coverage, provider access standards, quality assurance systems, data-reporting requirements, and grievance and appeals mechanisms. The contract enables Medicare to shift the financial risk for delivering Medicare benefits from the government to the plan. It establishes specific expectations about plan performance yet gives the plan considerable flexibility in deciding how to meet them.

To fulfill their contractual responsibilities, plans establish administrative and clinical systems through which they and their associated provider networks deliver care to the enrolled population. Of particular relevance to high-risk seniors, some plans establish care management systems that seek to identify and assess members who are likely to require extensive care, then manage the care delivered to those people. The exact structure of these internal subsystems varies among, and sometimes within, plans. Furthermore, for their Medicare populations, plans may establish structures, such as screening protocols or case management systems, that differ from those for other enrolled populations.

In Medicare managed care, as in Medicare fee-for-service, high-risk seniors draw on a wide array of services that are provided through a fragmented system of overlapping providers and funding sources (Bringewatt 1995; and Weiner and Skaggs 1995). These services include medical care, assistance from both paid and unpaid caregivers, and a variety of long term care and other services that lie outside the Medicare benefit package. High-risk seniors also engage in various self-management activities, including monitoring their physical and emotional status; engaging in health-promotion activities; and adhering to any recommended diet, exercise, medication, and treatment protocols.

Managed care plans have the structure and incentives to coordinate delivery of covered medical care; they also have considerable flexibility in determining the specific mix of providers and kinds of expertise reflected in the plan. Medicare + Care regulations also require that plans take some steps to reduce fragmentation, but the regulations provide only vague guidance about expectations in this area.

An implication of our conceptual framework is that seniors outcomes are shaped by a wide array of factors, only some of which are under the control of their managed care plan. These factors may vary from community to community and from person to person. The effects of any systematic effort an MCO makes to affect the delivery of care can be masked by the variation among high-risk seniors in the extent to which they can draw, or wish to draw, on family, friends, social service providers, and themselves to meet their needs. The effects of MCO efforts can also be masked by differences in the local availability of senior-related community services (such as home-delivered meals and financial aid for purchasing needed medications) that influence outcomes, particularly the extent of unmet needs for help with ADLs.

This difficulty in identifying the specific effect of an MCO means that our case study of only four MCOs will not be able to come to definitive conclusions about links between MCO structure and beneficiary outcomes. Nevertheless, we feel that it is possible to identify some suggestive patterns in the information we collected about MCO structure and in the experiences high-risk seniors report in our surveys. The combination of detailed operational information gathered from site visits to all four MCOs and consumer survey information gathered from beneficiaries in three of those MCOs gives us a strong base for examining ways in which MCO features may affect outcomes. In looking among these MCOs, we have seen that different MCO approaches are associated with differences in beneficiary perceptions about the MCO services. These patterns suggest challenges that all MCOs will face in serving high-risk seniors and offer some suggestions about useful ways to address those challenges.

The conceptual framework also highlights the potential importance of care management for coordinating the organizationally complex mix of services and providers. The set of services included in “care” can be very large for high-risk seniors. As a group, they are likely to have more providers, paid and unpaid, than other beneficiaries. They are likely to need medications and social support services that are not covered by Medicare and are delivered by providers who are not contractually linked to the MCOs. They and their families will often have to play a major role in monitoring the dynamic nature of their chronic conditions and complying with multi-part treatment regimens. Interest in making this fragmented system work effectively and efficiently leads naturally to interest in care management. Thus, it was not surprising that care management plays a key role in how the case study MCOs arrange care for high-risk seniors.

While interest in care management is high, we expect that MCOs will be cautious in their use of this service. Care management is not a covered Medicare benefit, and there is little clear evidence that it can generate net savings. Therefore, MCOs would be expected to undertake fairly limited care management programs until they develop a better sense of the ways in which such programs are affecting their net revenues and the health outcomes of their beneficiaries. In addition, we would expect that MCOs would deliver care management that focused on assessment and coordination of medical care. We would expect them to refer high-risk seniors to local social service providers for services that lie outside the Medicare benefit package (such as home-delivered meals or respite care for unpaid caregivers).

We also expect that MCOs organized as group or staff models will have more control over their providers than will Individual Provider Associations (IPAs) or network MCOs. The close relationship between MCOs and providers in group models gives these MCOs an internal source of ideas for making care more efficient and cost-effective, as well as a more direct ability to influence how care is delivered. In addition, group or staff MCOs would be expected to attract physicians and providers who are more comfortable with prepaid medicine. In contrast, network or IPA models tend to include providers that contract with several other MCOs as well as treat patients who have fee-for-service coverage (Collins et al. 1997). Thus, providers in these networks face multiple sets of financial incentives and, in some cases, multiple suggested care protocols and monitoring procedures. Any one IPA or network plan will therefore have only a limited ability to shape the care delivered by providers.

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